Gold Miners Outshine Bullion as Rational Equity Sees Upside in Mining Stocks

A new white paper by Rational Equity Asset Management suggests that investing in gold mining equities may offer more upside than buying physical bullion. According to the firm, global gold mining equities have outperformed physical gold and Gold ETFs since 2023.

The paper, titled Beyond Bullion: Why the Miners Are the More Profitable Way to Own Gold's Bull Run, points to stronger balance sheets, healthy cash flows, limited supply growth, and relatively attractive valuations as creating an opportunity in mining stocks. The authors believe that miners can benefit disproportionately when gold prices rise due to higher metal prices translating into stronger margins and cash flows for mining companies.

Rational Equity estimates free-cash-flow yields of 8-10% for large-cap miners and 15-35% for mid- and small-cap miners at a gold price of $4,500. The firm also highlights dividends and buybacks as additional sources of shareholder returns.